NRG Settlement Far From Settled

A proposed settlement to make amends for energy price-fixing during the Enron era is sending shockwaves through California’s electric vehicle charging industry. The settlement between the California Public Utility Commission (CPUC) and NRG Energy, which was announced on March 23, would require the energy company to spend $100 million on building out EV infrastructure and pay $20 million in cash to the CPUC.

The settlement is based on energy market manipulations committed more than a decade ago by Dynegy Inc., which at the time was a co-owner, along with NRG, of a portfolio of power generating plants that NRG later acquired in full.

More than half of the infrastructure investment would go towards installing 200 commercial EV charging stations. NRG would install the stations in the San Francisco Bay area, the San Joaquin Valley, the Los Angeles Basin and San Diego County, all areas expected to see significant penetration of EVs during the coming years.

The DC charging stations, which enable battery electric vehicles to fully charge their batteries in 15 minutes or less, would be owned and operated by NRG, which would receive all of the revenue derived from their usage. An obvious question is, How does opening up retail locations to distribute one’s services and generate revenue constitute reparations? This is akin to a petroleum company being ordered to open up more gas stations because they were overcharging customers.

The dissatisfaction with the settlement was a frequent topic of conversation in the hallways at the recent EV Infrastructure USA conference in San Diego. Competing EV charging services companies are unhappy that the “penalty” would give the company first-mover advantage in fast DC charging in many key locales throughout California. California currently has only one installed DC charging station.

Earlier in the week EV charging services company ECOtality filed a motion for public review of the CPUC settlement. The filing points out the potential hindrance to competition through the “monopoly-like benefits” and asks, “Does [the settlement] carry the potential to impair competition among different developing business models?”

Of the remaining funds, $40 million would go towards wiring homes, multi-unit dwellings, and public locations, such as schools and hospitals, to make them ready for the installation of EV charging stations. While this aspect of the contract at first glance might appear to serve the public interest (for those who happen to plan on buying a plug-in vehicle in the next few years), the ECOtality filing points out that “the settlement would confer exclusivity on NRG at the ’make ready’ sites for 18 months before competitors would have access to the use of these sites.”

The nascent EV charging infrastructure industry is as much about the land grab for prime locations as it is about technology and business models. EV charging vendors see great value in forging relationships with real estate companies and retailers before EVs become commonplace. An amendment to the agreement that would not inhibit competition would open up access to the pre-wired sites to competitive bidding amongst EV charging services companies.

EV owners could benefit initially if the infrastructure is put in place earlier than if the market were left to its natural evolution, but the benefits may be short-lived if competition is reduced. Many industry folks believe that the NRG settlement is unlikely to be approved if additional scrutiny and public review are permitted – which in this case seems only appropriate.